I don’t generally write much about teaser ad campaigns like this one, campaigns which don’t particularly tease a stock or even a single strategy. But so many people have written to me about this one, and it is so massively widely circulated, that I thought I’d share a few comments … if only to save you the effort of emailing me.
This is the ad that says that this special trader is “looking for novice crew to rob banks … legally” — and it is, of course, a very compelling ad that tells you how to access the “Hidden Money Mountain.” From looking around a bit on the various copywriter websites and forums, and reviewing the sales pitches by the folks who wrote this campaign, I can tell you that this is probably one of the most successful single ad campaigns of last year … it even won an internal prize from Agora for great performance, apparently.
Now, that’s not to say it’s bad — but just to share with you that it’s not new, nor secret, nor is it going out to a limited number of people. If he were really looking for a few folks for a “novice crew” he would have found them months ago. I’m not sure exactly how long this one has been around, but I think it’s been at least a year or so now.
Some of the questions about what this is are answered in the text of the ad itself — the writer claims to be a trader who left the hedge fund world to do his own trading and teach others to follow his examples.
He gives the pseudonym of “Mac X.” because part of the mystique is that this is top secret and he doesn’t want the banks to know that he’s letting their secrets out into the open. That’s obviously balderdash, but it works … don’t you feel like this is kind of privileged information? Even if it’s already been emailed to 30 million people?
And our friend Mac, champion of the little guy, says that he’s got a way for you to trade under the radar, so you don’t catch the attention of the big guys but can still harvest a few hundred dollars in net trading profits a day.
Again, he might have some good trading education to share with you — but this is also balderdash. As he does note in the letter, the foreign exchange market, where currencies are traded, is by far the largest trading market in the world, much larger than any stock market or the bond market in terms of trading volume. There’s no way on earth that anyone with the time to read his email … or the time to follow the mighty Gumshoe … is going to “catch the attention” of anyone in the Forex market by using any wildly innovative trading techniques. You could easily lose — or double — your entire liquid net worth in forex trading without anyone at any bank anywhere noticing a thing.
So this is clearly just another little tidbit put in to make you think that this is a good technique for “small timers” like you and I, folks who might think a couple hundred dollars a day is reasonable but not an outlandish promise.
And that’s true — I expect that if you have a reasonable size portfolio and are a very attentive trader who pays close attention to risk management, you could certainly generate that kind of an average trading profit. Well, I don’t know if you could, per se, but probably many folks could.
And you, being a discriminating and divine Gumshoe reader, would probably do better than most.
So, just to pull a little of the wool away from the eyes of those who have some difficulty in paying attention through a ten page sales letter — especially one that sends the rivulets of greedy sweat streaming toward your eyes as this one does:
This is, basically, an ad for a Foreign Exchange trading course on CD-ROM.
They claim to also provide “individual” guidance, but frankly I’d be skeptical — given the remarkable success of this ad, I find it very unlikely that the sellers are able to provide much personal guidance, even if they want to, to every purchaser. I could be just a bit too skeptical there.
But what you would essentially be getting with this service, the way I understand it, is a class in how to trade the major foreign exchange markets — the major currencies that are traded heavily are the US Dollar, Japanese Yen, British Pound, Euro, Canadian Dollar, Swiss Franc, and Australian Dollar.
The ad teases that he’ll teach you how to trade within the six highest volume investments in this market, which I assume means the six busiest pairs — don’t know exactly what those are, but every Forex trade is a pair — Dollar/Yen, Euro/Dollar, etc. You buy one currency with another, in effect, thereby betting in the expected divergence in the value of the two.
I’m no foreign exchange trading expert — and that’s an understatement — but I can tell you briefly what it is: It’s a traders market in which nearly everyone uses massive leverage and where very short term trades are the norm — you may be used to 2:1 leverage if you use margin in a stock account, for example, which means you’re borrowing as much as you invest … and someone trading futures in the pits in Chicago might use 15:1 leverage for their bets …
… but forex traders regularly use 100:1 leverage, since daily moves are usually relatively small in real terms and huge margin is needed to make any money in a reasonable timeframe. This makes sense — imagine that the dollar might move half a cent against the euro over a couple days, you’d need to heavily leverage up if you wanted to make money from that move, which is a move of less than a percent.
The flip side of that margin is actually two flip sides — it can be expensive to carry that margin, so if you are not a successful trader your capital slowly gets drained away … and, more importantly, if you are a really unsuccessful trader you can lose all of your money very quickly.
So … is it for you? That’s something only you can answer. Forex trading over the counter has been all the rage among individual investors for a few years, but almost didn’t exist a decade ago — before the advent of all these easily accessible electronic trading networks, you would have had to make currency bets by buying futures. I spent much of last year seeing a new article every few weeks about the popularity of forex trading among Japanese housewives … Italian retirees … midwestern investing clubs and, who knows, probably Canadian muskrats, too … if “everyone is doing it,” should that make you feel like you’re missing out, or should it make you really nervous?
Even worse, they talk about currency pairs trading pretty much every day on CNBC now, which makes us all believe that we understand where specific currencies should go next, and which central bank is likely to cut rates or raise rates next, or where the carry trade is moving. That strikes me as dangerous, with individual investors being continually encouraged to make highly leveraged bets on extremely big picture economic movements — which is, really, what currencies represent. But, again, perhaps I’m being too cautious.
If you’re a trader and want to spend your time learning currency trading techniques, I have no reason to believe that this particularly forex trading class/system is any better or worse than others — and there are thousands of similar type products available, most of which have not been marketed nearly as well as this one.
I have heard from a few folks that they actually tried it, ordered the package, and believed they got what they paid for … but then again, most of the ones I’ve heard from said they ended up sending it back for a refund because they weren’t committed to learning the stuff and doing this kind of trading. I have no idea whether those few comments I’ve received are representative of my readership, or of investordom overall. This is, by all accounts, certainly not a program that you’re going to load on your computer that’s going to do the work for you.
I can’t tell you whether or not this particular class is worth your time — but before taking it a step further and buying any service like this, I’d take a few moments to learn the basics of the foreign exchange OTC markets and forex trading, so you can make a guess about whether or not it’s going to be something to which you’re interested in dedicating a chunk of time and money.